HSBC Innovation Banking, a subsidiary of Europe’s biggest lender, hailed the UK’s enterprise value in its latest innovation report.

UK innovation firms raised £3.2bn of venture capital in the first three months of the year – an eight per cent increase from the first quarter of 2024.

The quarter attracted higher amounts of funding, with over six recorded megarounds and the second-highest average deal size since 2020.

Health ranked as the most funded sector, with its second strongest quarter on record. It more than doubled enterprise software, which came in second at £549m.

Megarounds from London-based Isomorphic Labs and Verdiva Bio at £455m and £312m bolstered the sector’s total.

This strengthened the UK’s lead over its European peers and cemented its position as the centre for such investment across the region. In the first quarter, the UK raised more than France, Germany and Spain combined.

Simon Bumfrey, chief executive of HSBC Innovation Banking, said: “The UK remains Europe’s innovation powerhouse – driving revenue, producing more unicorns, and capturing a growing share of VC investment.”

“With rising early stage investment, fast-growing sectors, and standout IPO candidates, we’re excited to see what the rest of the year holds for the UK innovation economy and remain focused on supporting firms to accelerate growth across the ecosystem.”

The UK’s innovation economy is worth £911bn, according to data from Dealroom.co cited in HSBC Innovation Banking’s quarter one report. Fintech made up a quarter of the figure at £219bn.

UK is top unicorn breeder in Europe

The report highlighted the UK has created 185 unicorns – a startup valued over £1bn – with two more added this year.